New Hampshire has one of the highest property tax rates in the U.S. Understanding New Hampshire real estate taxes can help you deduct the greatest amount in the upcoming tax year. Read more to find out about transfer tax, property tax, capital gains exemptions and more.
It’s true the world over that only two things in life are guaranteed — death and taxes. Property taxes are an inevitable piece of life’s financial puzzle that can quickly grow complex without a foundational understanding of them. Whether buying or selling a home, you may or may not have to pay property, sales, or transfer taxes depending on certain criteria.
We’ve outlined everything you need to know about New Hampshire real estate tax below. Keep reading and you could stand to save a bunch of money on your next real estate transaction.
Will You Have to Pay Taxes When You Sell Your Home in New Hampshire?
The majority of home sales are not taxed if a few requirements are met and while the federal government doesn’t charge a "sales tax" for property sales, most states do. Lucky for you, New Hampshire is one of five that does not charge sales tax on home sales.
If you’ve lived in the home for two years or more and gained less that $250,000 profit from the sale, than you will not have to pay taxes on the profit from your home sale. If you’re married and file jointly, your profits can extend to $500,000 before becoming taxable but the length of residence still applies.
If you’ve lived in the home for less than two years, you will have to pay a certain amount of tax on any profit made over the excludable amount. This tax rate will depend on longevity in the residence. If you’ve owned the home less than one year, the gain will be taxed at the rate equivalent to your regular income tax rate.
Have you lived there more than one year but less than two? The capital gains tax rate will apply — this is most likely less than your regular income tax rate. If time at the residence is not a concern but you’ve gained more than $250,000 ($500,000 for married and filing together) in profit through the sale, you’ll also be taxed at the capital gains rate.
How Much Are Real Estate Transfer Taxes in New Hampshire (and Who Pays Them)?
A real estate transfer tax is the fee associated with transferring the title of a house from one owner to another. These can be charged at county, city, or state level — in some areas, all three entities charge a transfer tax. The real estate transfer tax is also commonly referred to as "stamp tax", "mortgage registry tax" and "deed tax".
New Hampshire’s real estate transfer tax is very straightforward. This state’s transfer tax is 0.75% of the sale, paid by both buying and selling parties, for a total aggregate of 1.5%. The buyer can’t deduct this transfer tax from their federal income tax but they can roll the amount into their new house cost basis.
For example, let’s say you’re the seller and you have accepted an offer of $300,000 for the home. You and the buyer will each pay $0.75 per $100 dollars of that sale — meaning you’ll owe $2,250 in transfer taxes to the state of New Hampshire.
How to Calculate Property Taxes in New Hampshire
In order to make sure you’re maximizing returns and not overpaying taxes, it’s imperative to know how your taxes are calculated. It’s even better to come up with a rough estimate of what you can expect to pay, before taxes are actually due, in order to plan accordingly.
Property taxes contribute to vital services in the county — mail delivery, road maintenance, school systems, and more public works. Every one to five years, tax assessors will evaluate your individual property, including land and buildings, and then bill the corresponding rate previously set forth by the municipality. This rate is comprised by the total cost of providing said services to that area.
New Hampshire has the 3rd highest property tax rate in the country. If your Concord, New Hampshire home is valued at $365,000, you can expect to pay $8,245 in property taxes per year. However, if you live in New Hampton, New Hampshire, you’re property taxes significantly dip to $6,406 a year. A Clever Partner Agent will be knowledgeable about regional property taxes and could help save you money by recommending areas with lower tax rates.
Tax Breaks for New Hampshire Home Buyers & Sellers
Even though real estate related taxes can feel like they take a bite out of your yearly earnings, there are some substantial deductions for buyers and sellers, alike.
Tax Breaks and Credits for Buyers
- Property tax deductions can be taken if the buyer paid the tax when closing on the home or paid a taxing authority sometime throughout the year. Up to $10,000 of annual property tax is deductible.
- Homeowners are able to deduct most of the interest they pay on their mortgage loan each year for homes worth up to $750,000.
- Certain New Hampshire towns offer a Solar and Wind Exemption, which assess the value of the machinery and deduct that off the total property value before the tax rate is applied.
Tax Breaks and Write-Offs for Sellers
- Sellers are able to deduct the cost of repairs and improvements made within 90 days of the closing date. It’s vital to keep receipts and ensure the tight time frame is doable depending on which repair or improvement you’re making.
- The costs related to selling your home are also deductible. Hiring a real estate agent, hiring a professional cleaner, staging the home, etc. are all costs related to selling your house.
- If you’ve only lived in your home for a short period of time, you can most likely deduct discount points that went towards your mortgage. When you sell your home and pay off the loan, you can take a total deduction of remaining points at one time.
Tax exclusions and tax breaks can dramatically vary depending on the region, state, and even county you are buying or selling in. A local real estate agent will be able to point you in the right direction when it comes time to look for tax breaks related to selling your home. Additionally, a knowledgeable realtor may be able to save you money when purchasing a home by negotiating certain tax costs into the final cost of the home.